Cyrus Vance Jr., the Manhattan District Attorney, has issued a subpoena to Goldman Sachs, specifically based on the report written by Carl Levin for the Senate Permanent Subcommittee on Investigations, which showed that Goldman duped its clients by touting and selling them bond products that they ended up betting against. This big short of the mortgage market made them billions of dollars at the expense of their own clients, and they failed to disclose information to investors that would have shown them shorting the deals.
Senator Carl Levin, the Democrat of Michigan, who headed up the Congressional inquiry, had sent his findings to the Justice Department to figure out whether executives broke the law. The agency said it is reviewing the report.
The subpoena come two weeks after lawyers for Goldman met with the Manhattan District Attorney’s office for an “exploratory” meeting about the Senate report, the people said.
“We don’t comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully,” said a Goldman spokesperson.
The Levin report had an additional charge that Goldman executives lied to Congress about this arrangement. The Justice Department would have jurisdiction over that charge, and while subpoenas were expected to be issued by DoJ two weeks ago, so far they have not been.
In addition to DoJ, the SEC (which received a referral of the Levin report with a request for investigation) and the DA of Manhattan, New York Attorney General Eric Schneiderman has initiated an investigation into Goldman and other banks about the financial crisis, also asking for documents via subpoena. Goldman’s legal department has undoubtedly had to expand in the wake of all these investigations and document requests.
Goldman Sachs shares dropped 2% today, and since the release of the Levin report in April, they’re down 17%. Overall, since January, they’ve dipped from $170 to $136 a share, a drop of 20%.
I really feel for them.




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don’t feel bad Dave, they undoubtedly knew this was coming and have already sold their shares.
yawn
PlaceHolder can’t prosecute his own boss, for chrisissakes.
G-S owns O. It’ll be a long wait for subpoenas
This is breaking news? Its practice by Goldman has been known for at least a year. Does this signify a sluggy Justice Department, a sluggy Congress, or a dearth of personnel available at Justice to take up the case? I’m going for the latter, given the jihad launched by Republicans against ‘big government.’
Okay, no one will do jail time, but Goldman Sachs will probably be banned from the Hall of Fame.
St. Juddy of Gregg will be delegated to go mansplain to the DA why they can’t proceed.
DOJ is still packed with shysters put into place by Shrub/Cheney’s worthless fucking asshole AG.
Really??? The DOJ has not issued subpoenas yet??? What a not-shock.
HA!!! Place-Holder. I am totally stealing this. Love it.
Couldn’t happen to a nicer bunch. There’s also this:
from democracy Now
A prominent Wall Street analyst predicted this week that not a single top executive at Goldman Sachs will face criminal prosecution for the company’s role in causing the financial meltdown of 2008. “I think that there is a genuine sense out there that there are two sets of rules, one for big and powerful institutions that are deemed to be too politically interconnected or powerful to fail, and the rest of us, Main Street,” says our guest Gretchen Morgenson, the Pulitzer Prize-winning business reporter who has written extensively on how the U.S. government has failed to prosecute any of the top figures who played a role in the economic crash
I know, we know this already. Govt by the 1% for the 1%
What law did Goldman break exactly? Sure they may have sold some lousy investments to clients and bet against these investments with their own money, but the buyer should beware. This isn’t even remotely new. Michael Lewis wrote extensively about “jamming” bonds in Liar’s Poker back in the 80′s. If you are an investor in an instrument that you don’t understand well, like say complex mortgage bond simulators, you are a FOOL.
Indeed saving Goldman via making AIG pay 100 cents on the dollar, plus the billions that Goldman took in the bailout, means the 5th largest bank – Goldman – is not only paying the top folks over $20 billion in bonuses, they are hiring again.
Of course the 5000 to 10000 new jobs this year will all be in Brazil, India, and China.
But then they are an “American” corporation so we should be happy our tax dollars were well spent.
Is fraud illegal?
If so, did GS commit fraud? It seems to me that’s the basic question to be asked.
Hankie’s plan to:
1) use AIG as a passthru vehicle; then
2) take a demotion to SecTreas
was brilliant, don’t ya think?!
After DANY and NYAG take the initiative, watch Eric Holder suddenly jump into action, and take over/derail these investigations. I promise you that he won’t let these local guys touch a hair on Blankfein’s lyin’ head.
As Judd reminded us, you don’t want to upset your boss while you’re still in line for a promotion!
It could get ugly. DOJ has something called the Petit Policy the normally prohibits DOJ form prosecuting someone who has been successfully prosecuted at the state or local level. There are some exceptions.
The only way for Holder to gum up the works is before Vance or Schniederamn get to trial. I suspect DOJ will try to claim federal pre-emption as they and the COmptroller of the Currency kept doing to Spitzer.
NYS has a very strong securites fraud law called the Martin-Webb Act and it would easily cover what GS did. The case law interpreting the Martin Act is also very forceful.
So, it all depends on whether NYCDA and NYSAG lose one the pre-emption challenge.
Gretchen Morgenstern–who’s work I really admire—should go talk to Eric Dinallo about this, he can explain it to her. Or she can talk to me.
Did GS commit fraud? Well, maybe not in the ways we would normally expect. We have a lot of anecdotal evidence that there was massive fraud in creating sub-prime mortgages, but the biggest of those companies are already bankrupt and the executives have been given a free pass. I think the biggest frauds will turn out to be inadvertent; careless cheese-paring mistakes made in the paperwork creating the “securities” that made the banksters rich. More evidence is coming to light every day that because they were squeezing the last dollar out by using low-quality, untrained staff, paid peanuts and worked until they dropped, the paperwork was not done on time, was not properly signed, was not properly delivered to trusts, etc. There are hundreds of thousands of potential cases out there that should be prosecuted. But it may not get to the people I’d really like to see punished.
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